China has an underappreciated foreign policy tool that it has used increasingly in recent years: tourism. When Beijing wants to punish countries that go against its foreign policy interests, it cuts off the flow of Chinese tourists. There is likely more in store, and it will be very hard to counter.
On April 10, 2012, Filipino and Chinese ships clashed over the disputed Scarborough Shoal in the South China Sea. Quickly, major Chinese tourism agencies suspended group travel to the Philippines. On May 10, the Chinese government suspended all travel to the country. By the end of May, Chinese arrivals into the Philippines were 54 percent lower compared to April. As late as January 2013, Chinese arrivals were still 42 percent lower than the prior year.
Since this trial-run, Beijing has gone after bigger targets with greater effect. In 2016, China targeted Taiwan following the election of President Tsai Ing-wen and her pro-independence Democratic Progressive Party. In 2017, it targeted South Korea after Seoul’s decision to deploy a U.S. anti-missile system that Beijing deemed threatening.
Cutting off tourism is a perfect tool for China, as it imposes real costs on targets. The tourism cuts cost South Korea up to $15.6 billion and 402,000 jobs. China already has the world’s highest spending on outbound tourism, and the numbers are expected to grow. The more Chinese tourists spend, the more damage Beijing will be able to impose in the future.
Cuts in Chinese tourism also cause political blowback for targeted governments. In Taiwan, more than 10,000 tourism workers took to the streets blaming Tsai for the decline in mainland Chinese business. Conversely, the blowback in China is small. Its tourists, after all, can simply head to different destinations.
Tourism cuts are also easy for Beijing to use. Chinese tourists are almost three times as likely to travel as part of package tours compared to other countries. This gives China far more control than it would have over individual travelers. It took almost no time for China to cut package tourism to South Korea. In January and February 2017, 130,000 Chinese tourists per month traveled to Korea through package tours. In March, the number was below 3,000, and averaged that for the rest of the year. While individual tourism also fell significantly, it was a more gradual process.
Read the Full Article at The Diplomat
More from CNAS
VideoWeaponized Interdependence – Economic Networks, Sanctions, and State Coercion
Contrary to traditional arguments that globalization and economic interdependence will lead to increasing international cooperation, this episode discusses how states can weap...
By Elizabeth Rosenberg
CommentaryThe Travel Rule Is Not Enough If Crypto Gets Adopted
Last week, at a large fintech conference in Washington, DC, the head of the Financial Crimes Enforcement Network (FinCEN), the arm of the U.S. Treasury Department that enforce...
By Yaya J. Fanusie
VideoSaudi Arabia Moving Forward With Plans To Sell Shares Of Aramco
Saudi Arabia says it's going ahead with plans to sell shares of the state oil company, Aramco. It's a long-delayed effort to raise money for the monarchy's reform program but ...
By Rachel Ziemba
CommentaryWhy corporate America needs to have a code of conduct for China
The dispute between China and the National Basketball Association after Houston Rockets general manager Daryl Morey tweeted support for the Hong Kong protestors is the highest...
By Peter Harrell